Tony Muman leading Muhammad Ul-Haq ​represented the employer

In a significant ruling at the Birmingham County Court, an employer successfully appealed against a £45,000 civil penalty imposed by the Home Office.  The penalty was issued for allegedly employing an individual, who was deemed to have lost his right to work due to an implicit withdrawal of his asylum application.  ​

Background

The case revolved around whether the construction firm had conducted proper checks to verify the employee’s right to work. ​ The employee, an asylum seeker, had been granted permission to work in the UK under specific conditions. ​ The firm argued that it had carried out all necessary checks, including verifying his Application Registration Card (ARC) and using the Home Office’s share code system, which confirmed his eligibility to work for 20 hours per week. ​ However, the Home Office later claimed that the employee’s right to work had ceased, due to non-compliance with asylum procedures. ​

Key Issues

The appeal focused on three grounds:

1. Liability for the Penalty: The firm argued it was not liable as it had conducted the prescribed checks and reasonably believed the employee had the right to work. ​
2. Statutory Excuse: The firm claimed it was excused from the penalty under Section 15(3) of the Immigration, Asylum and Nationality Act 2006, as it had complied with prescribed requirements.
3. Penalty Amount: The firm contended the £45,000 penalty was disproportionate and would force the company into liquidation. ​

Court Findings

Her Honour Judge Truman at the County Court in Birmingham ruled in favour of the appellant, concluding that:

• The firm had conducted the required checks, including obtaining a Positive Verification Notice (PVN) from the Home Office Employer Checking Service, even though it could not produce a copy of the PVN during the appeal. ​
• The lack of a PVN copy did not negate the firm’s compliance with the prescribed requirements under the law. ​
• The penalty was disproportionate given the firm’s financial position and the circumstances of the case. ​ The judge noted that the firm had acted in good faith, openly documented the employee’s employment, and paid taxes and national insurance.

Outcome

The court allowed the appeal and cancelled the £45,000 penalty, citing the firm’s compliance with legal requirements and the disproportionality of the penalty.  HHJ Truman emphasised the importance of fairness and proportionality in such cases, noting that the penalty should reflect the gravity of the breach. ​ If the firm had failed to meet the statutory excuse, the judge indicated a reduced penalty of £5,000 would have been more appropriate. ​

Implications

This ruling highlights the importance of employers conducting diligent checks on employees’ right to work and retaining proper documentation. ​ It also underscores the need for proportionality in penalties, especially for small businesses that may face severe financial consequences from high fines. ​ The case illustrates helpful principles for future appeals against civil penalties imposed under the Immigration, Asylum and Nationality Act 2006.

Tony Muman is an expert in civil penalty cases and together with Muhammad Ul-Haq was instructed under direct access.

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